STATE OF CALIFORNIA

Public Utilities Commission

M e m o r a n d u m

May 8, 2008

Office of Governmental Affairs (OGA) - Sacramento

Subject:

AB 2857 (Lieber) - California Alternative Rates for Energy program.

As amended March 25, 2008

LEGISLATIVE SUBCOMMITTEE RECOMMENDATION: SUPPORT WITH AMENDMENTS

SUMMARY OF BILL:

This bill aims to amend Section 739.51 of the Public Utilities Code to require the California Public Utilities Commission (CPUC) to grant eligibility for the California Alternative Rate for Energy (CARE) program to residential users of gas and/or electric service who reside in master-metered multiple residential complexes in which not all units are submetered. The CPUC supports this bill with amendments. Amendments are suggested to provide clarity in the bill language.

SUMMARY OF SUPPORTING ARGUMENTS FOR RECOMMENDATION:

· The CPUC supports this bill with suggested amendments. Energy Division notes however that the CPUC has always required that submetered residents of a master-metered complex such as an apartment building, a mobile home park, or other facility receive rates similar to those that would have otherwise been charged directly to them by the utility as if they were customers of record. This includes submetered residents who are eligible for the CARE discount rate, regardless of the metered status of other units in the complex. Moreover, there is nothing in PU Code Section 739.5 that prohibits a submetered customer of a multi-family complex from receiving the CARE discount, regardless of the status of other tenants in the facility.

· The CPUC finds that the language change to PU Code 739.5 proposed in AB 28572 is not clear and therefore will not solve the problem the bill is attempting to address.

· Residents of mobile home parks, multi-family residential complexes such as apartment buildings and other similarly situated facilities have three types of tenants: (a) tenants who receive service directly from the utility company and therefore receive their CARE discounts directly from their energy provider; (b) tenants who have submeters and therefore must receive their utility bills including CARE discounts through their landlords; and (c) tenants who are not submetered but pay rents inclusive of utility costs.

· In case of customers who fall under (c), the CPUC, in Ordering Paragraph 4 of D. 89-09-0443, ruled:

"Low-income program rates will not be available to unmetered consumers because their energy bills are bundled with their rent and there is no way to enforce a pass through of the program discount to the consumer."

· The Energy Division believes that the findings of D. 89-09-044 still hold. Moreover, the Energy Division believes that it is not possible to provide CARE discounts to customers that have no meters or submeters because it is impossible to determine their energy usage.

· If the intention of the bill is to provide CARE eligibility to unsubmetered residents of mastermetered residential complexes who obtain their utility service through payment of a flat rate, or some other unknown utility service procurement structure other than a submetering structure, then this bill directly attempts to implement an implausible scenario directly in contradiction of D. 89-09-044.

· But if the bill is attempting to make it easier for customers who fall under category (b), namely customers who are submetered, the Energy Division supports the amendment because it believes that there might be some ambiguity in the way the utility companies are implementing PU Code Section 739.5 by denying CARE discounts to customers who reside in facilities where some of the tenants of a mobile home park, apartment building, or similarly situated facility are not submetered. Such customers, by law, should receive CARE discounts regardless of the status of other tenants in the multi-family residence, or mobile home park, or a similarly situated facility.

· (h), The Commission shall not deny eligibility for the California Alternative Rates for Energy (CARE) program, created pursuant to Section 739.1, for a residential user of gas or electric service who is a submetered resident or tenant served by a master-meter customer on the basis that some residential units in the master-meter customer's multiple residential complex do not use a submetering structure to obtain and pay for their utility services.

DIVISION ANALYSIS (Energy Division):

In 2004, a resident of Valley Breeze Mobile Home Park (Valley Breeze) in Yucaipa, CA brought a complaint to CPUC (Case 04-04-030) stating the owners of the park were not providing requisite submetering services to the park or correctly providing gas service rates and rebates to tenants from the utility (SoCalGas). In this case, the discount in question was the CARE discount, which offers 20% off a customer's utility bill if the customer's income is less than or equal to 200% of Federal Poverty Guidelines. The decision specifies that the complainant was a submetered resident, but that a flat rate payment structure (assumed to be bundled with rent) also existed for other residents of the complex.

The CPUC Decision (D.04-10-001) for this case was released on October 8, 2004, and ordered that Valley Breeze should refund to the complainant (and other affected submetered tenants) all rebates provided by SoCalGas to Valley Breeze; including those received for CARE in the three-year period prior to April 26, 2004. On January 31, 2008, the same complainant from the 2004 case against Valley Breeze contacted the Senate Select Committee on Mobile and Manufactured Homes stating SoCalGas had denied the CARE discount requests to them because they were residents of a partial, not fully submetered mobile home park4.

The PU Code establishes that CPUC's Office of Consumer Affairs, in consultation with the county sealer's office in the complainant's county of residence, is responsible for acceptance, response, and resolution of complaints. There is no clear delineation in the PU Code, however, of the enforcement mechanism for rebates such as the CARE discount. It appears the introduction of AB 2857 is a direct result of the Senate Select Committee to address this issue.

Subsequent to D.04-10-001, the CPUC also improved the implementation of PU Code 739.5 through implementation of the following:

· AB 21045, enacted on September 29, 2006, instructed the CPUC to further improve the CARE application process for "mobilehome parks, apartment buildings, or similar residential complexes receiving electric or gas service from a master-meter customer through a submetered system" so that submetered tenants may be able to apply directly with electric and gas corporations for enrollment in, and contacted for the renewal of, their CARE rates. AB 2104 also enacted that electric and gas corporations should provide master-metered customers with a timely list of CARE-eligible tenants residing in their specific complexes, which would then be updated for any additions/removals for each billing cycle. AB 2104 set these requirements to be fulfilled by the commission by December 31, 2007.

· Decision 07-12-0516, issued by the commission in December of 2007, provided direction for Low Income Energy Efficiency (LIEE) policy as well as guidance on renter access and implementation of AB 2104. In the Decision's Ordering Paragraph Number 6 (Page 92), each electric or gas utility is directed to file an affidavit no later than January 15, 2008, certifying each utility's compliance with the directives of AB 21047, which asks each utility to state that is has:

o Developed processes whereby it directly notifies and provides renewal applications to tenants of a mobilehome park, apartment building, or similar residential complex that are existing CARE customers; and

o Provides each master-meter customer that is subject to Section 739.5 with a list of tenants who are approved to receive discounts pursuant to the CARE program and that specifically identifies those tenants added to or deleted from CARE program eligibility since the previous billing cycle.

PROGRAM BACKGROUND:

· None.

LEGISLATIVE HISTORY:

Assembly Bill 2104 (Lieber, Chapter 738, Statutes of 2006) requires the CPUC to improve the California Alternative Rates for Energy (CARE) program application process for tenants who receive electric or gas service from a master-meter customer through a sub-metered system by December 21, 2007.